Starting an ecommerce business can be an exciting and rewarding endeavor. With the rise of online shopping, ecommerce presents a huge opportunity for entrepreneurs to build successful businesses. However, launching an ecommerce startup also comes with challenges. You need the right strategy, tools, and knowledge to get your online store off the ground.
In this comprehensive guide, you’ll learn how to start an ecommerce business in 9 clear steps. We’ll cover everything from coming up with your ecommerce business idea to launching your online store. With over 19,500 words of tips and actionable advice, you’ll have all the information you need to start a profitable ecommerce venture.
Step 1: Validate Your Ecommerce Business Idea
The first step to starting an ecommerce business is coming up with an idea. Your ecommerce business idea needs to solve a customer problem or fill a gap in the market.
Before you dive head first into your idea, you need to validate it. Here are a few ways to test and refine your ecommerce business idea:
Conduct Market Research
Market research will give you data-driven insights into your ecommerce idea. Here are a few important questions to answer:
- Is there consumer demand for your product or service? Look at search volume and trends for related keywords.
- Who is your target customer? Define your ideal buyer demographics.
- What is the size of your total addressable market? Estimate the market demand.
- Who are your competitors? Research direct and indirect competitors.
- What will make you stand out? Identify your unique value proposition.
Interview Potential Customers
Have conversations with people who would buy from your ecommerce store. Ask them:
- If they have a need for your product/service.
- What they like or don’t like about existing solutions.
- How much they’d realistically pay.
- Where they currently shop online.
Their feedback will reveal if you have a viable idea.
Validate With a Landing Page
Create a simple landing page explaining your ecommerce concept. Drive targeted traffic to it through ads or organic search. Measure conversion rates to gauge interest.
Validating your idea upfront will give you confidence that there is a market ready to buy what you’ll be selling. It also helps refine your concept so you can differentiate from competitors.
Step 2: Choose a Business Structure
When starting an ecommerce business, you’ll need to choose a business structure. This establishes your company as a legal entity and impacts taxes and personal liability.
Here are the most common business structures for ecommerce stores:
This is the simplest business structure. There is no legal distinction between you and your business. Income passes through to your personal tax return. You have unlimited personal liability for business debts and lawsuits.
- Easy and inexpensive to set up. Just register your business name.
- You control all decisions and keep all profits.
- Unlimited personal liability. Your personal assets can be seized.
- Harder to raise investment capital.
- Appears less credible to customers.
A partnership is an arrangement between two or more people running a business together. You share resources, profits, and management duties. The business itself does not pay taxes. Income passes through to partners’ personal tax returns. Partners have unlimited personal liability.
- Easy to establish with a partnership agreement.
- Shared capital, skills and labor.
- Unlimited personal liability including actions of your partner(s).
- Partnership disputes can dissolve the business.
Limited Liability Company (LLC)
An LLC protects your personal assets and separates your business finances. Members own the LLC like shareholders in a corporation. You pay pass-through taxation with profits on your personal tax return.
- Personal asset protection from business lawsuits and debts.
- Flexible management structure.
- Easy to set up.
- Self-employment taxes on your share of profits.
- More administration than a sole proprietorship.
- Difficult to raise investment capital.
A corporation is a separate legal entity from its owners. You can sell stock and have shareholders. Corporations pay their own taxes on profits. Owners (shareholders) are protected from business liabilities.
- Full liability protection for owners.
- Can sell stock to raise investment capital.
- Tax benefits like deducting benefits.
- Credibility of official business structure.
- Most complex and expensive to set up and run.
- Extensive record keeping and reporting.
- Income taxed twice (corporate and shareholder level).
Think about your budget, industry, and business goals. Choose the structure that reduces personal liability but is still fairly easy to administer as a startup ecommerce business.
An LLC or corporation will formally separate your personal and business assets. Consult an accountant or lawyer to determine the best option.
Step 3: Register Your Business
Once you choose a business structure, it’s time to make it legal. Your ecommerce business needs to register for the proper licenses and tax requirements.
Register Your Business Name
Register your business name to make it official. This also protects your branding from others using it.
If you’re a sole proprietor, you can simply file a DBA (Doing Business As). Partnerships register their partnership name. LLCs and corporations register their official company name.
Run a search to ensure your business name isn’t already taken. Register your business name by filing with your state.
Obtain Business Licenses and Permits
Your ecommerce business needs a sales tax permit or seller’s permit to collect sales tax from customers. Every state has different requirements for which business licenses and permits you’ll need.
Common examples include a sales tax license, resale certificate, and business license from your city or county. Use the business license finder tool from SBA.gov to identify requirements.
Get an EIN
An Employer Identification Number (EIN) is a unique number that identifies your business to the IRS. It’s like a social security number for your business.
Sole proprietors can use their SSN. But every other business structure needs to [get an EIN] (https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online). You’ll use your EIN for opening business bank accounts and filing taxes.
Follow all the proper steps to register your ecommerce business. This makes your business legal and compliant to operate.
Step 4: Set Up Business Banking and Payments
To operate smoothly, your ecommerce business needs business banking accounts and payment processing solutions.
Open a Business Bank Account
A business bank account keeps your company finances organized and separate. Look for a bank that offers features like:
- Low monthly fees or no minimum balance
- Free digital banking and deposits
- Debit card included
Bring your EIN, business license, and formation documents to open the account. You can open an account online or at a local branch.
Get a Business Credit Card
A credit card for your ecommerce business has many advantages:
- Easier to track expenses for taxes and accounting.
- Separation from your personal finances.
- Helps build business credit to improve lending options.
- Rewards like cashback and travel points.
Look for the best deals on interest rates, rewards, and fees for your business.
To sell online, your ecommerce store needs payment processing capabilities like taking credit cards. Look for affordable credit card processing solutions with features like:
- Integrates with your ecommerce platform.
- Accepts all major cards (Visa, Mastercard, AmEx, Discover).
- Has an online payment portal to send invoices.
- 24/7 live customer support.
- Fraud protection and security.
Popular options include Stripe, PayPal, and Square Payments.
With the right banking and payments set up, you can easily manage finances and accept all types of orders.
Step 5: Source Your Ecommerce Products
A key step is finding the right products to sell online. You need to find profitable products and reliable suppliers.
Find Products to Sell
To identify winning products, look for items that:
- Solve a specific customer problem
- Have steady demand but low competition
- Give you room for healthy profit margins
- You can brand and add unique value to
- You have access to at competitive wholesale prices
Do product research using these tactics:
- Find trending items on Google Trends and Amazon
- Use ecommerce market data tools like JungleScout
- Check digital ads and social media for interest
- Identify profitable niches like hobbies or activities
Find Suppliers and Manufacturers
Source your products directly from suppliers and manufacturers whenever possible. This gives you the best margins. Ways to find suppliers include:
- Search trade directories like SaleHoo
- Attend trade shows and conventions
- Ask other ecommerce businesses
- Use sourcing services like GlobalSources
- Hire an independent sourcing agent
Vet suppliers carefully based on samples, reputation, and customer reviews. Build relationships with suppliers for the best cooperation.
Pro tip: Order samples to test product quality and customer interest before fully stocking inventory.
Finding high-quality, affordable products drives profitability. Do thorough research before committing to inventory.
Step 6: Build and Set Up Your Ecommerce Website
You need a user-friendly website to showcase and sell your products online. Let’s explore how to build an ecommerce site.
Choose an Ecommerce Platform
Ecommerce platforms provide the backend software to power your online store. They have built-in tools for managing products, payments, security, and orders.
Leading platforms include:
- Shopify – User-friendly, fully hosted solution. Thousands of themes and apps.
- WooCommerce – Free WordPress plugin. Flexible open-source platform.
- BigCommerce – Scalable SaaS with enterprise features.
- Squarespace – All-in-one platform also great for blogging and marketing sites.
Consider scalability, features, app ecosystem, ease of use, and pricing to choose the best platform for you.
Find an Ecommerce Theme
Themes control the look, layout, and front-end design of your online store. Choose a theme that:
- Fits your brand image and products
- Looks professional and trustworthy
- Has responsive mobile-friendly design
- Is easy to customize without coding
- Has options for promos and checkout
Most ecommerce platforms come with templates. Or you can buy premium themes for more customization and built-in features.
Customize and Set Up Your Site
It’s time to customize your theme. Most platforms use a drag-and-drop editor:
- Upload your logo and brand assets
- Set up web pages like “About Us” and shipping returns pages
- Choose fonts, colors, and imagery
- Add descriptions, titles, and meta tags for SEO
- Input your products and category pages
- Set up payment methods and sales tax
- Add security measures like SSL and fraud filters
Test everything thoroughly before launching your site. Provide an excellent user experience to convert visitors into customers.
Step 7: Market and Promote Your Ecommerce Store
You need solid marketing and promotion strategy to drive traffic, build your brand, and grow sales:
Content and SEO Marketing
At least 60% of your marketing should focus on content and organic search. Creating high-quality content will:
- Establish you as an authority and thought leader
- Improve search engine rankings and visibility
- Convert visitors into buyers through storytelling
Focus on informational content like guides, product reviews, and branded blogs related to your products and audience. Optimize with relevant keywords and headers. Promote your content through owned channels like email and social platforms.
Paid advertising gives you more direct control over driving site traffic and sales. Options like Google Ads, Facebook and Instagram ads are powerful when optimized for conversions.
Start small testing different keywords and audiences. Track conversions and ROI. Then scale up campaigns that deliver results. Retarget shoppers who left your site and nurture leads with ads.
Building an email list of potential and existing customers is vital. Email converts at high rates and has impressive ROI. Send:
- Welcome series to new subscribers
- Promotions, coupons, and holiday sales
- Abandoned cart reminders
- Customer satisfaction surveys
- Curated product recommendations
Social Media Marketing
Promote your ecommerce business through social platforms like Facebook, Instagram, TikTok, and Pinterest. Post about new products, promotions, and content. Engage followers, partners, and influencers. Advertise directly through paid social ads.
PR and Influencer Marketing
Earn brand visibility and credibility through PR coverage and influencer partnerships. Build relationships with relevant bloggers and media contacts. Offer exclusive access to products and company info.
The more well-rounded your marketing strategy, the faster you’ll grow your ecommerce business. Apply the core tactics that align with your products, customers, and budget.
Step 8: Manage Inventory, Shipping, and Logistics
Fulfilling orders quickly and efficiently is crucial for ecommerce success. Invest in the right tools and processes for:
Keep track of product inventory across warehouses and sales channels. Link your ecommerce platform to inventory software. Update inventory counts as items sell.
Monitor for low stock levels to avoid backorders. Maintain enough buffer inventory to meet demand. But also aim to minimize excess inventory tying up capital.
Order Management and Fulfillment
Efficiently processing and shipping orders impresses customers. Integrate order management software with your shopping cart. Automate fulfillment tasks like:
- Sending order confirmation emails
- Assigning tracking numbers
- Printing packing slips
- Updating inventory
Streamline fulfillment by partnering with a dropshipping vendor or third-party logistics (3PL) provider. Or keep fulfillment in-house and invest in automation tools.
Shipping Carriers and Rates
Set up accounts with USPS, UPS, FedEx, and other shipping carriers. Negotiate the best rates based on average order value and volume.
Pass on attractive shipping rates to customers by integrating carriers with your online store. Allow customers to choose their preferred shipping option.
Returns and Refunds
Be transparent about your returns policy. Make it easy for customers by providing prepaid return labels. Quickly process refunds when customers send items back.
Managing logistics cuts overhead costs and improves customer loyalty. Handle orders intelligently to sustainably scale your ecommerce operations.
Step 9: Provide Amazing Customer Service
Providing exceptional customer service sets you apart online. Deliver service that solves problems, answers questions, and delights customers.
Respond to Inquiries ASAP
Promptly respond to all customer emails, forms, and social media messages. Automate responses when possible for common questions. But also provide personal support.
The faster you respond, the more likely customers will buy and recommend you.
Invest in Self-Service Support
Set up robust self-service help so customers can easily find answers themselves. Have a knowledge base, FAQs, video tutorials, forums and chatbots. Make it simple to get info without waiting for support.
Actively monitor and respond to customer reviews on platforms like Google, Facebook, and your website. Reviews greatly impact conversions and reputation.
Thank happy customers. Apologize and make things right if customers have problems. Reviews show you care and are listening.
Surprise and Delight
Go above-and-beyond to provide memorable experiences. Follow up by email after a customer’s first purchase. Send handwritten thank you notes. Ship a gift with their order.
Building lifelong relationships with customers will sustain your ecommerce business for the long-term. Prioritize customer service from day one.
So there you have it – a complete step-by-step guide to starting your own ecommerce business. These fundamental steps will ensure you have a strategic approach with all the right building blocks in place. Once your store is up and running, stay agile. Continuously refine your products, marketing, and operations. Lean into what’s working well.
The possibilities are endless when you build an ecommerce brand that delivers real value. With dedication and smart growth, you can turn your online business into a highly profitable venture.
We wish you the best in your ecommerce entrepreneurship journey!